Monday, July 14, 2003

Amos: City's Convergys deal gives too much, gets too little

I'm learning some unpleasant lessons about being over a barrel.

Last week, my air conditioner gave out. The repairman's bad news: a leaking coil needs replacement. That'll be $650.

Too hot, too tired, too busy to shop around, I forked it over but vowed to be smarter next time.

Cincinnati and Ohio may be making a similar decision, but for too high a price tag.

Convergys, one of the few major international companies based here, has for the past year let everyone know it's willing to move its 1,450-person headquarters out of downtown Cincinnati for the right circumstances.

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Ohio countered with an offer of $144 million in tax credits and grants. Cincinnati's city council may vote Tuesday to add $63.4 million more in tax credits and grants.

That's $200 million in incentives to keep fewer than 2,000 jobs. Too expensive.

Cincinnati's offer contains employment incentives; the more people Convergys brings downtown, the more of a $4 million cash grant it gets.

Convergys already employs 500 workers in other Tristate locations. It need only reach 2,125 employees downtown to get the entire grant.

Meanwhile Cincinnati would lose up to $3.53 million a year in city income tax revenue.

Mayor Charlie Luken says he's a reluctant champion of the deal, convinced by the struggles of cities like Columbus and Toledo to keep major employers.

"This is the best example of a nationwide trend (of businesses) putting themselves up for bid," Luken said.

Actually, Luken has been a consistent advocate for Convergys. In May, when state lawmakers considered closing some corporate tax loopholes, Luken reminded them that Convergys is spooked by bigger tax bills.

The loopholes stayed. But will Convergys?

Convergys has been a strong corporate citizen since its 1998 spinoff from Cincinnati Bell Inc., says Renea Morris, its spokeswoman.

"This is not a giveaway. We really see this as an investment in the future of the city and its economic well-being," she says.

Luken doesn't improve the city's bargaining stance by thinking about downtown like it's a dog with fleas.

"We're fighting to keep the American Airlines reservations center. That's 700 jobs. Cincinnati Bell now has some reason to change where it is and to consolidate," he says.

Those companies haven't taken a page from Convergys' book yet, but Luken says we can expect other companies to. New companies relocating here also may require deals, he says.

Which is why we can't afford this.

I agree that downtown needs major investment. But so much money for what is essentially a corporate retention effort hurts downtown.

This deal encourages more companies to use government like it's a bank. Let's not buy into this over-the-barrel mentality.


E-mail or phone 768-8395

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